Counterbalancing Rising Rates: Managing the Customer Impact – Ohio and Pennsylvania

1. Counterbalancing Rising Rates:Managing the Customer Impact – Ohio and Pennsylvania Tom Clark Vice President, Customer Service & Service Area Development 2008 Marketing Executives Conference

2. FirstEnergy Corp. • Headquartered in Akron, Ohio • Seven electric utility operating companies • 5th largest investor-owned electric system in the U.S.based on 4.5 million customers served • 18 generating plants; approx.14,200 MW • ATSI: FirstEnergy subsidiary that owns transmission assets within utilities’ service area • 14,500 employees • Ranked 209 among Fortune 500 companies in 2008 2008 Marketing Executives Conference

3. FirstEnergy Service Areas Customers* Sq. Miles Toledo Edison 313,000 2,300 Ohio Edison 1,040,000 7,000 The Illuminating Co 755,000 1,600 Penelec 589,000 17,600 Penn Power 159,000 1,100 Met-Ed 546,000 3,300 JCP&L 1,087,000 3,200 Total 4,490,000 36,100 * As of Dec. 31, 2007 FirstEnergy Summary Profile 2008 Marketing Executives Conference

4. Stable Rates for Illuminating Company, Toledo Edison & Ohio Edison Customers Toledo Edison Since 1996 Illuminating Company Since 1996 Ohio Edison Since 1990 2008 Marketing Executives Conference

5. 21% 41% Electricity Use Increasing for CEI, TE & OE Customers 2008 Marketing Executives Conference

6. Cost Increases – Last Five Years 107% 109% 176% The cost of the materials utilities must use to deliver the electricity provided customers has skyrocketed during the past five years. * Sources: Handy-Whitman Index of Electric Utility Equipment; Bureau of Labor Statistics Producer Price Index for select components. 2008 Marketing Executives Conference

7. Ohio Legislation Background • Under Ohio’s restructuring law (SB 3), generation rates fixed from 1999-2005 • Fixed rates were scheduled to end December 31, 2005, but extended through 2008 under Rate Stabilization Plan • SB 221 was a legislative response to: • Concerns about sharp increases in electric generation prices seen in states with expiring price caps • Desire to encourage alternative energy and energy efficiency • Includes mandates for: • Renewable Energy: • At least 12.5% of total portfolio by 2025, with at least half generated by facilities in Ohio • 0.5% from solar by 2025 • Energy Efficiency: 0.3% of utility’s average annual kWh sales, increasing to 22.2% by end of 2025 • Demand Reduction: 7.75% by 2018 2008 Marketing Executives Conference

8. Overall averages – differs by rate schedule and customer usage • All-electric customers • Industrials • High/low use residential customers Electric Security Plan Customer Benefits • Modest, managed price increases for most residential customers • Managed price increases • 5.32% in 2009 • 4.01% in 2010 • 5.99% in 2011 For OH customers using 750 kWh per month: • $0.51 in 2009 –Decrease • $3.17 in 2010 –Increase • $2.77 in 2011 –Increase 2008 Marketing Executives Conference

9. Ohio’s New Energy Efficiency Mandate Total Reduction in Electricity Use: From0.3% in 2009to 22.2% in 2025 22.2% reduction in current demand is equivalent to Beaver Valley units 1 and 2 2008 Marketing Executives Conference

10. Energy Efficiency and FirstEnergy: An Overview Objective Adopt cost-effective strategies that enable customers to better manage their energy use while providing the company opportunities to further improve the efficiency of its operations • Key Strategies • Provide solutions to customers – from controlling energy costs to helping customers better understand billing and payment issues • Change customer usage behavior to help achieve sustained energy savings and peak load reduction • Design programs so results can be accurately and reliably tracked 2008 Marketing Executives Conference

11. Win-Win for Customers and Company • Customers • Benefit through the more efficient use of electricity • Company • Encourage more efficient use of system by shifting customer demand to off-peak periods and improving operating efficiencies on energy delivery systems 2008 Marketing Executives Conference

12. Overview of Energy Efficiency Potential • Significant efficiency opportunities – from generation to end-use Generation Transmission Distribution End-UseUtilization ~70% lossNational Average ~3% loss ~5% loss ~88% loss(incandescent light example) Renewables Fuel Electricity Electricity Electricity 100 ~30 ~29 ~28 Nuclear Coal Source: EPRI 2008 Marketing Executives Conference

13. Load Control Programs • Programmable thermostats • Installed free to residential customers in Ohio; 10,000 customers by end of 2008 • Remote temperature adjustment during periods of high demand 2008 Marketing Executives Conference

14. Customer Education • Sustainable energy savings start with customer education • Change behaviors through: • Energy-saving tips: online and print • Energy efficiency seminars • Customer energy inventory audits • Weatherization for low-income households • Online Energy Calculator and other Web-based tools • Feedback through customer research 2008 Marketing Executives Conference

15. Pennsylvania: Met-Ed/Penelec Voluntary Pre-Payment Plan • Up to 9.6% of bill • Pre-payments would earn 7.5% interest • Set to begin in 2009, would reduce 2011-2012 bills 2008 Marketing Executives Conference

16. It All Comes Back to the Customer • Offering moderate price increases • Promoting the wise use of our product • Serving as a trusted source of information 2008 Marketing Executives Conference